While we wait on the latest signal from the Morrison government on whether it might shift its position from “preferring” to reach net zero emissions by 2050 to joining the 129 countries that have set an actual target, it is worth considering the language of a man central to that decision: the deputy prime minister.
In recent days, Barnaby Joyce has told journalists he was perplexed that Australia was not spending more time discussing the plight of the UK given it had, in his words, “completely botched it” on energy and was “having to go back and recommission coal fired plants to keep the lights on”.
It was, Joyce suggested, a cautionary tale of what could go wrong in the shift to net zero emissions. After all, he said, the story could be trusted because he had read it in the Guardian, and wasn’t just “some right-wing rant”. So what is happening with energy in the UK and is it relevant to the situation in Australia?
Is there an energy crisis in the UK?
At a headline level, Joyce is correct – a genuine energy crisis is unfolding in Britain as the northern winter approaches. But the situation is more complicated than his passing references have implied.
The UK gets about 40% of its electricity from renewable sources, about 40% from fossil fuels and about 20% from nuclear. Wind energy has grown dramatically in recent years while coal has all-but disappeared, providing just 2% of generation last year. Gas-generated electricity has remained roughly steady at about 37%.
As the Guardian’s Jillian Ambrose reported, the UK crisis is the result of “a perfect storm of market forces”, mostly affecting gas supply. Gas prices have more than quadrupled over the past year, and leapt by 70% in the past month alone.
There are fears several energy suppliers could collapse, and an expectation roughly 500,000 more people will be pushed into fuel poverty, and be forced to choose between heating their homes and other essentials such as food.
Why are prices so inflated?
Basically, because there isn’t enough affordable gas available.
In recent years, as North Sea reserves have diminished, Britain has become reliant on imported gas. Right now, it’s hard to come by at a decent price.
Several countries – not least China – have made a faster economic recovery from Covid-19 than expected, and significantly increased energy use. Meanwhile, gas storages in Europe are depleted after a particularly cold 2020-21 winter, and Russia has refused to increase its flow of gas to the west above the minimum required to deliver on its contracts.
This has hit much of Europe, but the UK has been particularly severely affected. The problem has been exacerbated by a series of unrelated problems in its electricity supply, including a major power cable connection to France giving out due to a fire, several old nuclear plants shutting for unplanned maintenance and wind generation falling during the least windy summer in 60 years.
With the exception of the historically low wind supply, none of the problems are related to climate change policy. But as Joyce noted, the result has been British authorities resorting to temporarily firing up dormant coal-fired power stations to fill the breach.
Could this happen in Australia?
No system is immune from unforeseen disasters, but it seems unlikely. The problems facing the UK’s energy system mostly do not apply here.
For a start, gas plays a much smaller role in the electricity grid. Australia’s eastern states still get more than 60% of electricity from coal, nearly a third from renewables and just 6% from gas.
Regulators are planning for a future in which coal is overwhelmingly replaced by solar and wind, with “dispatchable” sources – batteries, pumped hydro, demand management programs and, for at least a while, gas – being used to fill the gaps. While the Morrison government still talks of gas as a “transition fuel” and has promised a “gas-led recovery” from the pandemic, including committing more than $600m public funding for a new publicly owned gas plant, official forecasts suggest the reliance on gas generation will not increase.
Australia is also less reliant than Britain on global markets to provide the energy it needs. Where the UK is a gas importer, Australia extracts a vast amount each year and ships about three-quarters of it overseas. Gas prices on the Australia east coast are tied to global markets, and have soared dramatically in the past, but it is within the government’s power to make decisions to ensure local supply is maintained and to improve affordability.
Similarly, the continuing expansion of solar and wind generation in Australia is not affected by demand for either energy in China, or the whims of the Russian government.
It’s not a new idea, but the biggest risk to the Australian electricity system remains a failure by governments to plan for what everyone knows lies ahead: the likely accelerated closure of an ageing, and increasingly economically unviable, fleet of coal-fired power generators.